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What is the difference between an FDD and a franchise agreement?

The difference between the FDD and the franchise agreement is that the franchise agreement is the actual contract between the franchisor and the franchisee. The FDD is a disclosure document that contains the franchise agreement as an exhibit, but it also has 23 “Items” ahead of the franchise agreement that explains, in plain English, the terms of the franchise agreement. Franchisors are required to follow many guidelines in explaining things to consumers so that the consumers are not signing a contract that they do not fully understand.

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